Taxes and Taxation

Б А К А Л А В Р И А Т

А.И. Варламова, О.Ю. Дигтяр М.В. Мельничук, В.М. Осипова Английский язык: НАЛОГИ И НАЛОГООБЛОЖЕНИЕ TAXES AND TAXATION

Рекомендовано Экспертным советом УМО в системе ВО и СПО в качестве учебника для направления бакалавриата «Экономика»

КНОРУС • МОСКВА • 2020 УДК 81:336.02(075.8) ББК 81.2Англ.-923я73 В18

Авторы (Финансовый университет при Правительстве РФ): А.И. Варламова, О.Ю. Дигтяр, М.В. Мельничук, В.М. Осипова

Варламова, Алла Игоревна. В18 Английский язык: налоги и налогообложение = Taxes and Taxation : учебник / А.И. Варламова, О.Ю. Дигтяр, М.В. Мельничук, В.М. Осипо ва. — Москва : КНОРУС, 2020. — 194 с. — (Бакалавриат). ISBN 978-5-406-07589-0 Отражает междисциплинарный принцип подхода к преподаванию блока профес сиональных дисциплин. Соответствует ФГОС ВО последнего поколения. Для студентов бакалавриата, обучающихся по направлению подготовки «Эконо- мика», профиль «Налоги и налогообложение», и изучающих дисциплину «Иностран- ный язык в профессиональной сфере». Ключевые слова: налоги и налогообложение; прямые и косвенные налоги; на логовые льготы. УДК 81:336.02(075.8) ББК 81.2Англ.-923я73

Варламова Алла Игоревна Дигтяр Олеся Юрьевна Мельничук Марина Владимировна Осипова Валентина Михайловна АНГЛИЙСКИЙ ЯЗЫК: НАЛОГИ И НАЛОГООБЛОЖЕНИЕ TAXES AND TAXATION Изд. № 518348. Подписано в печать 06.06.2019. Формат 60 90/16. Гарнитура «News Gothic». Усл. печ. л. 12,5. Уч.изд. л. 13,2. Тираж 500 экз. ООО «Издательство «КноРус». 117218, г. Москва, ул. Кедрова, д. 14, корп. 2. Тел.: 8-495-741-46-28. Email: [email protected] http://www.knorus.ru Отпечатано в АО «Т8 Издательские Технологии». 109316, г. Москва, Волгоградский проспект, д. 42, корп. 5. Тел.: 8-495-221-89-80.

UNIT 1...... 6

PART 1...... 6 TOPIC FOCUS: The history of taxation in the world...... 6

PART 2...... 14 TOPIC FOCUS: Tax planning...... 14

PART 3...... 22 TOPIC FOCUS: 5 Year-End Tax Strategies You Don’t Want to Miss...... 22 Taxes throughout Russian history...... 23 Taxes in Kievan Rus’: Poliudie and Povoz

UNIT 2...... 26

PART 1...... 26 TOPIC FOCUS: The Russian tax system...... 26

PART 2...... 34 TOPIC FOCUS: Roles of Tax Consultants...... 34

PART 3...... 42 Taxes throughout Russian history...... 43 Poliudie

UNIT 3...... 46

PART 1...... 46 TOPIC FOCUS: Special tax treatments...... 46

PART 2...... 55 TOPIC FOCUS: Tax Accounting Careers...... 55 4

PART 3...... 61 TOPIC FOCUS: 5 Ways to Short Bitcoin...... 61 CASE STUDY...... 62 Taxes throughout Russian history...... 63. “Any owner has to part with what has fallen from the cart”. Russian road duty “Myto”

UNIT 4...... 66

PART 1...... 66 TOPIC FOCUS: Functions of Taxation...... 66

PART 2...... 74 TOPIC FOCUS: Key Taxation Vocabulary...... 74

PART 3...... 81 TOPIC FOCUS: How the GOP* Tax Bill Affects You...... 81 Taxes throughout Russian history...... 82. Tribute to the Golden Horde

UNIT 5...... 85

PART 1...... 85 TOPIC FOCUS: Classes of taxes...... 85

PART 2...... 93 TOPIC FOCUS: Direct and Indirect Taxes...... 93

PART 3...... 99 TOPIC FOCUS: How Will Your Tax Bracket Change?...... 99 Taxes throughout Russian history...... 100. The tamga tax

UNIT 6...... 102

PART 1...... 102 TOPIC FOCUS: Corporate profit tax...... 102

PART 2...... 109 TOPIC FOCUS: Corporate Income Tax...... 109

PART 3...... 115 TOPIC FOCUS: What Is An ICO?...... 115 CASE STUDY...... 116 Taxes throughout Russian history...... 117. The salt tax 5

UNIT 7...... 120

PART 1...... 120 TOPIC FOCUS: VAT...... 120

PART 2...... 127 TOPIC FOCUS: How VAT works...... 127

PART 3...... 135 TOPIC FOCUS: I want to start my own ICO. How do I do that?...... 135

Taxes throughout Russian history...... 136. Heavy Taxes and Burdens Under Peter the Great

UNIT 8...... 140 PART 1...... 140 TOPIC FOCUS: The Mechanism of VAT collection...... 140

PART 2...... 148 TOPIC FOCUS: Capital Gains Tax...... 148

PART 3...... 156 TOPIC FOCUS: How Interest Rates Affect Property Values...... 156 Taxes throughout Russian history...... 158. The beard tax

UNIT 9...... 160

PART 1...... 160 TOPIC FOCUS: An Excise...... 160

PART 2...... 166 TOPIC FOCUS: Roles of Tax Authorities...... 166

PART 3...... 173 CASE STUDY...... 175 Taxes throughout Russian history...... 176. Government regulations against the monasteries

DIALOGUES...... 178

ЛИТЕРАТУРА...... 192 UNIT 1 PART 1 TOPIC FOCUS: THE HISTORY OF TAXATION IN THE WORLD

Discuss these questions with a partner. 1. What do you know about the history of taxation? 2. What countries have the lowest and the highest taxes? 3. Can taxes be negative or positive? 4. Is it possible to have “rational” tax system?

Exercise 1. Practice reading the following words and collocations. a) approximately; bureaucracies; diverse; eventual; failure; fifth; foreign- er; grievance; headgear; issue; jurisdiction; militiamen; partially; significantly; stationary; surplus; throughout; thus; turmoil; wearisome; welfare; weird; b) ancient civilizations; centralized governments; Chinese societies; effort; European and Mediterranean civilizations; Egyptian Pharaohs; excessive tax burden; Greeks, Egyptians and Romans; functional equivalent; hefty duties; Jews and Christians; medieval period; mercenary force; monarch; Muslim conquerors; previously purchased; tax legislation; tax records; c) accumulate; be dedicated to smth.; be obligated to do smth.; be subject to smth.; enforce tax policies; ensure; weigh heavily on smth. The history of taxation The basic principles of taxation are nearly as old as human society—the history of taxes stretches thousands of years into the past. Several ancient 7 civilizations, including the Greeks and Romans, levied taxes on their citizens to pay for military expenses and other public services. Taxation evolved significantly as empires expanded and civilizations became more structured. The earliest known tax records, dating from approximately six thousand years B.C., are in the form of clay tablets found in the ancient city-state of Lagash in modern day Iraq. This early form of taxation was kept to a min- imum, except during periods of conflict or hardship. The Greeks, Egyptians and Romans also enforced tax policies that they used to fund centralized governments. The Greeks levied several types of taxes that are still enforced in many developed countries, including taxes on property and goods. Unlike early Greek taxation, the Roman policies began to weigh heavily on the citizens as the power and corruption of the empire’s central government grew. The excessive tax burden on productive Roman citizens during the 4th and 5th centuries was a leading cause of the nation’s eventual economic collapse. Early taxation was not limited to European and Mediterranean civilizations, ancient Chinese societies also levied taxes on their citizens. The Chi- nese instituted a form of property tax around 600 B.C. that required 10 percent of cultivated land to be dedicated to the central government. All produce generated from the dedicated portion of land was taken as a tax. Fair taxation was a key issue for many English citizens during the medieval period. Most citizens were subject to a poll tax, which was a flat tax on every adult in a jurisdiction, as well as property and church taxes. Even peasants that did not own land had to pay property taxes on land that they rented. They were also obligated to donate 10 percent of their labor or produce to the church. In 1215, a large portion of the English nobility revolted against their monarch, King John, who had implemented new taxes and increased exist- ing ones to finance his military ambitions in continental Europe. The king levied more taxes to help pay for a large-scale conflict, including hiring a large mercenary force, and to make up for the loss of taxable territories in France during the war. Many land-owning nobles did not trust King John’s leadership and did not feel responsible for supporting the war effort. While turmoil and provincial strife dominated European politics, a unified and expansive empire emerged in the Middle East. Muslim conquerors took over a large portion of northern Africa and the Mediterranean region during the 14th and 15th centuries. They ruled over a diverse collection of popula- tions, including nomads, Jews and Christians, who were subject to special forms of taxation that did not apply to Muslim citizens. Stationary societies that did not convert to the beliefs and traditions of Islam had to pay a special tax. 8

Taxation policies developed quickly during the colonial period as wealth began to flow into Europe from colonies in Africa, Asia and the Americas. Great Britain enforced the first general income tax in 1799 to help finance their war against Napoleonic France. This tax was also scaled according to income, much like the income taxes levied in most modern systems. The dispute between the American colonists and the English crown that eventually led to the American Revolution is partially attributed to disputes concerning fair taxation. The colonist’s main grievance with the tax policy was distilled into a simple phrase, “No taxation without representation.” While the colonists were forced to pay taxes to England, including hefty duties on staples like tea and stamps, they did not receive any direct representation in Parliament or in the monarch’s court. When the United States was founded, the federal government levied relatively few taxes. The country did not maintain a significant military force during times of peace. Instead, it relied on local militiamen for protection from marauders and local rebellions. The central government was also much smaller than it is now, and required much less money to maintain. As the new country developed, it encountered several crises and conflicts that prompted changes to the tax code. The first federal income tax in the United States was created shortly after the Civil War to pay for the debts accrued during the costly internal conflict. The tax was not universal; it was only applied to citizens above a certain income level. This federal income tax was repealed in the 1870s, but a later administration created new federal tax legislation in 1894. Many European nations also adopted income taxes during the 19th century. The unifying Prussian influence over many of the independent German states helped entrench the principles of income tax in continental Europe.

Exercise 2. In the text, find the answers to the following questions. 1. Why did ancient civilizations impose taxes on their citizens? 2. What can you say about taxation in Greece, Egypt and the Roman Empire? Were their systems similar? 3. Was China distinct in taxation? Why? Why not? 4. Did English people have the excessive tax burden? 5. Why did the English nobility revolt against King John in 1215? 6. What can you say about the taxation policy in the Middle East? 7. What does the saying “No taxation without representation” mean? 8. Were there lots of taxes when the United States was founded? Why? Why not? 9. What was the purpose of the first income tax creation in the USA? 9

Exercise 3. Find a word in the text that matches each definition below. The words appear in the same order as in the text 1. A society that has developed its own culture and institutions. ______2. (two words) Service provided or supported by a government or its agencies.______3. A means by which governments finance their expenditure by imposing charges on citizens and corporate entities.______4. To impose rules; to keep in compliance.______5. (two words) The amount of income, property, or sales tax levied on an individual or business.______6. Very old.______7. (two words) Local tax assessed on property owned, such as real estate or automobiles______8. (a phrasal verb) To compensate for something.______9. (two words) Annual tax levied by the Federal government, most states, and some local governments, on an individual’s or corporation’s net profit.______10. Costing a lot of money, or costing too much money. ______

Exercise 4. Sentence completion. Read the sentences and complete them with the following words. equivalents expenditures interest enforcement taxation unemployment infrastructure indirect law taxpayer

1. A tax is a financial charge or another levy imposed upon a ______(an individual or legal entity) by a state or the functional equivalent of a state to fund various public ______. 2. A failure to pay, or evasion of or resistance to taxation, is usually punishable by ______. 3. Taxes consist of direct or ______taxes and may be paid in money or as its labour equivalent. 4. Few countries impose no ______at all, such as the United Arab Emirates and Saudi Arabia. 5. Money provided by taxation was used by states and their functional ______throughout history to carry out many functions. Some of these include expenditures on war, the ______of law and public order, protection of property, economic ______(roads, legal tender, enforcement of contracts, etc.), public works, subsidies, and the operation of government itself. 10

6. A portion of taxes also goes to pay off the state’s debt and the ______this debt accumulates. 7. Governments also use taxes to fund welfare and public services: education systems, health care systems, pensions for the elderly, ______benefits, and public transportation.

Exercise 5. Text completion. a) Read this article about the history of taxation in which some sentences and phrases are missing. ______(1) The word ‘tax’ first appeared in the English language only in the 14th century. It derives from the Latin taxare which means ‘to assess’. Before that, English used the related word ‘task’, derived from Old French. ______(2). ‘Tax’ then developed its meaning to imply something wearisome or chal- lenging. So words like ‘duty’ were used to suggest a more appealing purpose. ______(3) China has one of the longest of all written records, and we know that taxes were levied here some 3,000 years ago as the Empire was being established. Powers (usually military) that were able to impose taxes created the first bureaucracies to collect and administer them. Under the Egyp- tian Pharaohs ‘scribes’ were charged with raising funds in any way practi- cable, including a tax on household cooking oil. ______(4). The ‘Book of Genesis’ in The Bible suggests that a fifth of all crops should be given to the Pharaoh. The city states of Ancient Greece imposed eishpora to pay for wars, which were numerous; but once a war was over any surplus had to be refunded. Athens imposed a monthly poll tax on foreigners. Imperial Rome used tribute extracted from colonized people to multiply the bounty of empire. ______(5).

b) Match these sentences (A-E) with the gaps in the article (1–5).

A For a while, ‘task’ and ‘tax’ were both in common use, the first requiring labour, the second money B Julius Caesar imposed a one-per-cent sales tax; Augustus instituted an inheritance tax to provide retirement funds for the military C Regular audits were conducted to ensure that oil was not recy- cled — perhaps the first historical record of ‘avoidance’ D The origine of the word “tax” E The written evidence 11

Exercise 6. Fill in the following prepositions where necessary. after in(x3) from for on (x2) to(x2) throughout of (x2)

______(1) history there have been many strange, unusual, and weird taxes. Many of them were implemented to raise additional revenue, while the purpose ____ (2) others was to promote social change. Here are some of the strangest ones. ___ (3) Ancient Egypt, cooking oil was taxed, and on top of that, people had to buy their taxed cooking oil ____ (4) the Pharaoh’s monopoly, and were prohibited from reusing previously purchased oil. In Ancient Rome, it was not uncommon for slave owners to free their slaves _____ (5) a certain number of years of work. Slaves could pay a fee because many of them had the opportunity to work ____ (6) several places, and thus could earn the money used to obtain their freedom. The Roman government required the newly freed slave to pay a tax _____ (7) his or her freedom. During the Middle Ages, European governments placed a tax on soap. It remained in effect ___ (8) a very long time. Great Britain didn’t repeal its soap tax until 1835. In 1696, England implemented a window tax, taxing houses based ____ (9) the number of windows they had. That led ____ (10) many houses hav- ing very few windows in order to avoid paying the tax. Eventually this became a health problem and ultimately led _____ (11) the tax’s repeal in 1851. In 1705, Russian Emperor Peter the Great placed a tax on beards, hop- ing to force men to adopt the clean-shaven look that was common _____ (12) Western Europe. The French had a salt tax called the gabelle, which angered many and was one _____ (13) the contributing factors to the French Revolution.

Exercise 7. Word formation. Complete these sentences using the base word given at the end of each sentence. You need to form an appropriate word. The first one (0) is given as an example. 0 In 1660, England placed a tax on fireplaces. The tax led to people covering their fireplaces with bricks to conceal them and avoid paying the tax. (PAY) 1 In the 1700’s, England placed a tax on bricks. Builders soon realized that they ______use bigger bricks (and thus fewer bricks) to pay less tax. (CAN) 12

2 In 1712, England imposed a tax on printed wallpaper. Builders avoided the tax by ______plain wallpaper and then painting patterns on the walls. (HANG) 3 England introduced a tax on hats in 1784. To avoid the tax, hat-makers stopped calling their ______“hats”, leading to a tax on any headgear by 1804. (CREATE) 4 In 1789, England ______a tax on candles. People were forbidden from making their own candles unless they obtained a license and then paid taxes on the candles they produced. (INTRODUCTION) 5 In 1795, England put a tax on the aromatic powders that men and women put on their wigs. This led to a dramatic decline in the ______of wigs. (POPULAR) 6 In 1885, Canada created the Chinese Head Tax, which taxed the entry of ______immigrants into Canada. (CHINA) 7 Salt was a very popular thing to tax because ______is necessary to humans. (CONSUME) 8 England has a tax on televisions. If you own a television in your home, you must pay an annual fee, ______called a television license, for each television you own. (FORMAL) 9 Color televisions are taxed at a _____ rate than black and white televisions. (HIGH) 10 ______enough, if a person is blind and owns a TV in his or her home, he or she still has to pay the tax, though only half of it. (INTEREST) 11 States like Iowa, Pennsylvania, and New Jersey exempt pumpkins from a sales tax but only if they are ______and not carved. (EAT)

Exercise 8. Match the left parts (1-3) with the right ones (A-D). 1 tax rates A allow you to set different tax rates for items such as Shipping, Gift Wrapping and custom product classes. 2 tax zones B are the percentages at which products or services are taxed. 3 tax classes C are the geographical areas which tax rates are . applied to. They can be defined by country, state/. province or zip/postal codes. UNIT EXTENTION Exercise 9. Two-minute presentation. Choose one of the following subjects and prepare to give a two-minute presentation to the group. • The various systems of taxation in ancient time • The various systems of taxation in medieval time 13

• The various systems of taxation in modern time • The impact of taxes on the course of civilization • The crucial role of taxes in the Roman Empire • Strange and unusual taxes from around the world • History of taxation in the United States • History of taxation in Russia • History of taxation in the United Kingdom • A brief history of Australia’s tax system • Successful tax reforms in the world • A world history of tax rebellions • Taxation: its triumph and collapse 192

Литература

1. Engel B. A., Martin J. Russia in World History, Oxford University Press,, 2015. 176p. 2. Basic tools for tax professionals. IRS. URL: https://www.irs.gov/tax- professionals/basic-tools-for-tax-professionals 3. Arsenovsky D., English for tax professionals. ProEngllish Publishing. 2016. 4. Dictionary of taxation terms. Copyright European Commision. 1996. 5. Hosking G. A., Russia and the Russians: A History. 2001, Harvard University, 718 p. 6. Investopedia — URL : https://www.investopedia.com/ 7. Burgan M., Empire of the Mongols. Shoreline Publishing Group LLC, p.75—76, 2004, 160 p. 8. Hellie R., The Economy and Material Culture of Russia, 1600—1725. University of Chicago Press, 1999/ 9. Schuyler Eu. Peter the Great, Emperor of Russia: A study of Historical Biography. Vol.2, 1889. Reprint. London : Forgotten Books, 2013. 138—139 10. Исторический словарь URL: diclist.ru/slovar/istoricheskiy/a/povoz.html 11. История России кратко. URL: https://www.historynotes.ru 12. Словарь налоговых терминов и понятий. М. : НИИ РосНОУ, 2015. 40 с.